Total store mainstream sales are up +1.9%—effectively flat across all departments. Meanwhile, organic product sales are up in the high double digits in every department. The health craze is exploding with consumers constantly looking for solutions to improve their health. Improving our diets with quality healthy food is the first thing all of the experts recommend. Organic products are up +16.9% yet organic products account for only 3.1% of total store sales.
Savvy retailers interested in growing sustainable sales need to capitalize on this important trend. Shoppers who are unable to find the healthy products they demand will leave your store and shop at your competitors.
Shoppers want transparency and authenticity in the products they purchase and the foods they feed their families. Package claims and labels can be very confusing and misleading. The rule of thumb has always been to avoid center store when shopping for healthy better-for-you products. That is no longer true as natural organic products continue to grow in their popularity—expanding into virtually every category. Organic products offer simple and easy-to-understand ingredients that shoppers can trust and have confidence in.
Most shoppers first learn about and develop a trust with organic products in the produce and dairy departments. Organic product sales are up +14.4% in produce and +13.7% in dairy. It’s important that retailers showcase organic products effectively in these two departments to build sustainable sales in center store. It’s up to the retailer to introduce shoppers to natural organic product alternatives by category. Retailers who do this effectively will develop a strong and loyal shopper base helping them compete more effectively in any channel and in any economy.
Effective merchandising strategies to capitalize on these trends include:
1. Always focus on the shopper first. Consumers want to be listened to and appreciated. They want to shop at stores that are focused on helping them achieve their health goals. They want simple, shopper-friendly and convenient solutions that are priced fairly. Shoppers want real value for their hard-earned dollars. Health-conscious shoppers will gladly pay a premium for products that meet their needs. The myth that shoppers only choose products based on price is a lie. Savvy retailers need to shift their focus from price to meeting shoppers’ needs and wants.
2. Aggressively showcase and promote organic products in the produce and dairy departments. Use this strategy to drive traffic in your store. These are both high-traffic categories that provide an excellent opportunity for savvy retailers to engage new shoppers and build brand loyalty (retailer brand). Effective merchandising and showcasing products in these departments will establish you as the “go-to” retailer of choice for consumers looking for healthier alternatives.
3. Make organic products more shopper friendly. Make it easy for shoppers to find and sample the organic products you feature by department. Shoppers can’t purchase what they can’t find. While this sounds simple, this is the biggest mistake most retailers make. Retailers should call out or highlight organic products in every category. This can easily be accomplished with shelf talkers and unique product identifiers and shelf tags.
4. Integrate organic products next to their non-organic counterparts. Make it easy for shoppers to compare organic and non-organic brands side-by-side on the shelf. When organic products are merchandised in a separate section there is no way for shoppers to effectively compare their value against other products. For example: organic bread merchandised next to non-organic super premium bread will make it easy for shoppers to choose the product that best meets their needs—even with a 30¢ price difference. Shoppers will easily “trade-up” and select the healthier alternative when you make it easy for them to appreciate the difference between the two products. Shoppers will gladly pay a few cents more for products that better meet their needs. Not only will you increase shopper satisfaction, but you will also grow category sales using the strategy.
5. Increase your organic product offerings. Offer a wide selection of organic products in every category to offer consumers healthier choices. Organic products sales are responsible for sustained category growth across the entire store.
6. Cross merchandise organic products. There is tremendous synergy among organic products. Most retailers fail to realize that shoppers who buy organic products in one category will typically buy organic products across the entire store. The shopper that purchases organic bread will more likely also purchase organic spreads.
Following these simple steps will improve shopper foot traffic, increase shopper loyalty and help you compete more effectively. WF
Also, watch our interview with Daniel Lohman, CPSA from The Healthy and Natural Show floor!
Source: Nielsen Answers Period Ending 1/23/2016 Total US Food, Drug, Mass, Walmart, Sam’s, BJ’s, Dollar Stores, and Convenience.
Daniel Lohman, CPSA, is an organic and CPG industry strategic advisor with Category Management Solutions (CMS4CPG.COM).
Published in WholeFoods Magazine June 2016